2019 Budget Should Not Commit To Unsustainable Subsidies: Harare Economist

The Minister of Finance and Economic Development Mthuli Ncube is set to present the National Budget tomorrow. Economists have identified areas which Ncube has to prioritise in the budget. Harare-based economist Brains Muchemwa spoke to the Herald yesterday. He said

The most important thing is to ensure that the Government does not commit to providing subsidies that it cannot finance in a sustainable manner; in a manner that does not bring or compromise its fiscal sovereignty.

The second thing is to ensure that we should have a very clear roadmap towards a market-based exchange rate so that at least we eliminate the distortions that are growing in the economy on account of a fixed exchange rate; roadmap that will restore confidence while at the same time not compromising the social security of the public; it’s a difficult balancing act, but we need a commitment towards a market-based exchange rate.

The Government has to come up with very clear and specific targets-the minister has been very eloquent with regards to revenue side, we are raising taxes, going for people who are not paying taxes and we have put a new law-but there has not been clarity on the exact the benchmarks of what Government is targeting on the expenditure side to ensure that we at least manage our budget deficit.

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